Can Auto Stocks Show Where the PALL ETF Will Go Next?

InvestorPlace reported that because palladium tends to trade in tandem with auto stocks, auto stocks can indicate — sometimes weeks ahead of time — what the ETFS Physical Palladium Shares (ARCA:PALL) will do next.

As quoted in the market news:

The most dramatic example occurred in 2011, when the DJUSAU began to fall in mid-May even as palladium continued to drift sideways. The two diverged for the next three months, and by August, the accelerated downturn in auto shares provided a preview of what was to come in palladium. The metal finally caught up to the autos in September of that year, falling off the table for a loss of 22.5% in the month.

Along the way, the DJUSAU provided signals of intermediate-term moves in palladium with lead times of anywhere from several weeks to several days, as indicated by the solid lines.

[Currently, t]he Dow Jones U.S. Auto Manufacturers Index has tacked on nearly 15% since April 6, whereas palladium has declined a little over 5% in that time. If the pattern of the past two years holds true, palladium is due to play catch-up from here.

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